Correlation Between Newpark Resources and CaliberCos

Can any of the company-specific risk be diversified away by investing in both Newpark Resources and CaliberCos at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Newpark Resources and CaliberCos into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Newpark Resources and CaliberCos Class A, you can compare the effects of market volatilities on Newpark Resources and CaliberCos and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Newpark Resources with a short position of CaliberCos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newpark Resources and CaliberCos.

Diversification Opportunities for Newpark Resources and CaliberCos

-0.79

Correlation Coefficient

Newpark Resources  CaliberCos

Pay attention - limited upside

The 3 months correlation between Newpark and CaliberCos is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Newpark Resources and CaliberCos Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaliberCos Class A and Newpark Resources is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Newpark Resources are associated (or correlated) with CaliberCos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaliberCos Class A has no effect on the direction of Newpark Resources i.e., Newpark Resources and CaliberCos go up and down completely randomly.

Pair Corralation between Newpark Resources and CaliberCos

Allowing for the 90-day total investment horizon Newpark Resources is expected to generate 0.39 times more return on investment than CaliberCos. However, Newpark Resources is 2.59 times less risky than CaliberCos. It trades about 0.08 of its potential returns per unit of risk. CaliberCos Class A is currently generating about -0.02 per unit of risk. If you would invest  712.00  in Newpark Resources on September 13, 2024 and sell it today you would earn a total of  82.00  from holding Newpark Resources or generate 11.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Newpark Resources  vs.  CaliberCos Class A

Newpark Resources

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newpark Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Newpark Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CaliberCos Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CaliberCos Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Newpark Resources and CaliberCos

The main advantage of trading using opposite Newpark Resources and CaliberCos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newpark Resources position performs unexpectedly, CaliberCos can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CaliberCos will offset losses from the drop in CaliberCos' long position.

The idea behind Newpark Resources and CaliberCos Class A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.